Bailout may brighten UTOPIA future

Published: Sunday, April 6 2008 12:56 a.m. MDT

Without question, the 11 pledging members of the Utah Telecommunications Open Infrastructure Agency (UTOPIA) have shouldered an incredible risk.

They've promised to back $202 million in bonds with sales tax revenue to build a fiber-optic network that data, phone and television providers can use to deliver their services.

The hope is that they'll never have to fork over a dime — that revenues will pay those debts.

Smaller cities — Tremonton, Payson, Lindon, Brigham City and Centerville — have pledged in the $250,000 to $330,000 range. Murray, Layton, Orem and West Valley have pledged between $1.2 million and $2.8 million.

If UTOPIA's pledging members are put on the line for repaying those bonds, it could represent a serious hardship for those cities.

Now, city councils in member cities are being asked to take on more debt over a longer period to bail the network out of what UTOPIA officials call a "bad loan" from the federal government.

But, officials say, restructuring the consortium's bonds should give UTOPIA the boost it needs to make progress and secure a bright future.

UTOPIA currently has just over 7,000 customers in the six cities where services have begun: Murray, Midvale, West Valley, Orem, Lindon and Payson.

Five other cities — Tremonton, Brigham City, Perry, Layton and Centerville — are waiting for service to begin while construction continues.

Construction is 95 percent to 99 percent completed in Lindon, Payson and Tremonton.

Perry, Orem and Murray are about 50 percent completed, Midvale is at 40 percent, Brigham City is at 33 percent, Centerville is at 25 percent and Layton and West Valley are at 15 percent completion.

Riverton, Cedar Hills, Vineyard, Cedar City and Washington have joined the consortium as non-pledging members, which means they won't see service until revenues grow enough to pay for construction.

Vineyard and Washington joined in 2007.

UTOPIA operations run about $300,000 a month, said Jim Reams, Orem city manager and interim UTOPIA director. But the consortium has reached the break-even point with its 7,000 subscribers.

That means that any new subscribers will help pay down debt.

Success stories

It's fairly easy to track down success stories from current customers. Orem City Hall is connected to the network and saves $50,000 a month, said Reams.

"That money goes back into city operations that are more beneficial than paying for phones," Reams says.

Just a few years ago, Alexander's Print Advantage in Lindon sent employees back and forth by car to its largest customers, ferrying entire computer hard drives that stored colossal data files containing books and graphics-heavy posters.

Then Lindon joined UTOPIA.

Company leaders successfully pushed to get UTOPIA's high-speed fiber-optic pipes laid to Alexander's sooner than scheduled.

Now, staggering amounts of digital information sweep into and out of Alexander's every day, a technological trick impossible without the controversial private-public project.

"We were really killing our connection," Alexander's chief technology officer Dan Mortimer said. 'We have three customers who do a significant amount of data transfers every day. We were uploading a couple hundred major files a day and overwhelming our capacity."

Alexander's set up a 10-megabit pipe through UTOPIA for 60 percent of the cost of the T-1 line that had struggled to keep up with the print shop's needs.

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